Company Has Its Own Standards

¶ … company has its own standards of success, there is some degree of commonality, at least among public companies. While the owners of private companies can define success on their own terms, rational investors define success in terms of key market metrics. They use net profit, dividend distribution, market share and growth measures to determine if a company has been successful. This applies to all public companies, since investors are free to move their money to whichever company they feel offers them the best values. That capital can flow freely places all public companies on even footing -- they must all impress the same set of investors and therefore must all utilize the same financial measures. Investors utilize a wide range of financial ratios and market metrics, depending on the industry, to analyze the success of a company's operations. The same is true of other stakeholders -- customers can use other suppliers if their quality standards are not met, for example.

Companies themselves commonly evaluate their own position on the market and the position of their competitors. They use benchmarks to determine what their standards of performance and measures of success should be. Many firms are focused more on internal success measures, but even those firms keep on eye on their competitors.

2. On the BMW website, differentiation begins immediately with an option to enter a discourse about "sheer driving pleasure." Further into the site, ads appear with video that conveys images of joy and playfulness. There is a section that provides information and photographs of the company's headquarters in Munich. This modern design of the building and focus on excellence is conveyed throughout this section and the entire website.

BMW's differentiation strategy has been successful in creating competitive advantage. The company owns one of the world's most recognizable luxury car brands. Without catering to the mass market, BMW holds a 2% market share in the U.S. (Wall Street Journal, 2009), which constitutes a much higher market share in the luxury segment. This competitive advantage is necessary because the luxury car segment has long relied on track records of excellence -- the long history and enormous strength of the BMW brand supports its luxury positioning (Franzen, 2007). The company is successful without having to move into the "cost leadership" segments of the market.

3. Bridgestone is highly oriented to vertical integration. The company produces its own rubber, in order to match the specifications for its tires. Bridgestone therefore keeps its production and product development functions in-house. This allows the company to have a high degree of uniformity in its products.

The company performs inbound logistics and operations, primarily. It is also responsible to a lesser extent for outbound logistics, sales and service, but the emphasis is on procurement and product development.